Thursday, January 24, 2013

MF UNTOUCHABLE: Corzine Wins Again

How you like me now...
I swear to tell the truth, the whole truth and nothing but the truth.
MF Global Judge Nixes Customer Group's Bid to Depose Corzine

A bankruptcy judge on Tuesday rejected a bid by former MF Global customers to depose the collapsed brokerage's former chief, Jon Corzine.
In a written ruling in U.S. Bankruptcy Court in Manhattan, Judge Martin Glenn said the Commodity Customer Coalition, which had sought permission to question Corzine and other former MF Global insiders, lacked standing because it is not a direct creditor in the case.
The coalition, a grassroots group led by Chicago-based commodities trader James Koutoulas, bills itself as representing the interests of thousands of traders whose accounts at MF Global were frozen when the company went under.  But the coalition itself is merely a "'watchdog' entity with its own independent goals," hoping to depose Corzine "in furtherance of its own interests" rather than those of the MF Global estate, Glenn said in his decision.
Koutoulas, reached by phone on Tuesday, dismissed that reasoning as "the most minute technicality imaginable.  I could have filed 10,000 versions of the motion, one on behalf of each customer we represent," Koutoulas said, adding that the coalition is considering appealing the decision.
Most commodities customers have recovered about 80 percent of the value of their accounts through payouts by James Giddens, the trustee in charge of finding as much of the money as possible and liquidating MF's broker-dealer unit.
The coalition has said Corzine should face criminal charges for his role in the company's fall, though the exact nature of that role has been unclear. Many officials, including the Department of Justice and the FBI, have been investigating the case and have spoken to MF Global executives.
The coalition in November sought permission to depose Corzine, Chief Financial Officer Henri Steenkamp, former Chief Operating Officer Bradley Abelow, General Counsel Laurie Ferber, former Treasurer Edith O'Brien, and Christine Serwinski, former finance chief at MF's North American brokerage.
Continue reading...

We Are Going To Kill The Dollar

The Money Institution Must Be Ended - Anonymous Voice Over

PBS Frontline - Wall Street Untouchables

Watch The Untouchables on PBS. See more from FRONTLINE.

The Untouchables - Why No One On Wall Street has Been Prosecuted
Premiering tonight on PBS.
There are several additional interviews and articles at Frontline.  They are definitely worth checking out.  Especially this little beauty with Lanny Breuer.

 Frustration in Washington - Lawmakers question executives and grow impatient with the pace of criminal investigations.

The Justice Department Under Fire - Mr. Covington & Burling

Lanny Breuer exposed by Frontline... (must read)

Check Out The $9 Billion Dollar Check That Saved Morgan Stanley (PHOTO)

The largest physical check ever written.
A few weeks prior to TARP, Goldman Sachs went to Warren Buffett for $10 billion and Morgan Stanley found a bailout partner in Mitsubishi.
Morgan Stanley received a $9 billion investment from Mitsubishi UFJ in the fall of 2008 that kept the firm from collapsing.  The payment was supposed to be wired electronically, but because it needed to be made on an emergency basis on a holiday, Mitsubishi cut a physical check, perhaps the largest ever written.
That's $9,000,000,000.

CEO of JPMorgan says you don’t need to know how banking works, it’s like an airliner engine, too complex to explain, just shut up and pay us. -

CEO of JPMorgan says you don’t need to know how banking works, it’s like an airliner engine, too complex to explain, just shut up and pay us. -

By Nick Sorrentino, Against Crony Capitalism

Jamie Dimon in Davos Switzerland today explaining why people don’t need to know what’s going on in the banking world. It’s too “complex.” Just know that their fee comes from managing this ball of financial confusion. And that’s all you need to know.
There, don’t you feel better? I mean it’s not like the world bailed out the whole banking system or anything. We should have faith.

10 Highlights From Frontline Report On Why No Wall Street Execs Are In Jail Over Mortgage Mess

Last night, PBS’ Frontline looked at a question many Americans have asked — Why have no top Wall Street executives been prosecuted for their part in the 2008 financial crisis? — and took it right to man at the Justice Dept. who isn’t bringing those charges.
You can watch the entire show — broken up into four segments — below, and there are a ton of supporting materials and content available on the Frontline website. But for those who just want to get a run-down of the episode, here are some highlights:
1. Former Countrywide exec realizes that maybe his company’s lending policies are a bit lax
Only months after starting at Countrywide in 2005, Michael Winston saw a car in the parking lot with a plate reading “FUND EM.” Here is his recollection of the conversation he had with a co-worker –
Winston: “‘FUND EM’… That’s an interesting plate. What do you suppose that means?”
Co-worker: “That’s [Countrywide CEO] Angelo Mozilo’s growth strategy… We have a loan for every customer.”
Winston: “A loan for every customer. How can that be? What if the person doesn’t have a job?”
Co-worker: “Fund ‘em.”
Winston: “What if he has no income?”
Co-worker: “Fund ‘em.”
Winston: “What if he has no assets?”
Co-worker: “Fund ‘em.”
Winston: “What are the criteria you use to make lending decisions?”
Co-worker (smiling): “If they can fog a mirror we’ll give them a loan.”
2. Interviews with due diligence underwriters reveal how lenders knowingly ignored fraud.
Before banks buy up bundles of mortgages made by other lenders, they send teams of due diligence underwriters to review the files and make sure they aren’t buying piles of radioactive mortgages.
Tom, a due diligence supervisor who would go on to become a whistle-blower, recalls his underwriters laughing and comparing stories as they came across mortgages that were obviously problematic.
“Here’s a guy that’s moving from $500 rent to a $650,000 house, and he’s an electrician and his wife’s a waitress — HA HA HA — everyone in the room laughing,” he says.
In cases where it was obvious that the lender had made a mistake or that fraud had occurred during the approval process, the underwriters say there were forbidden from calling it by its real name.
“We couldn’t say the word ‘fraud’ because we couldn’t prove that it was fraud,” explains another underwriter, who says she and her co-workers were repeatedly told to never use that word. “Even if we suspected, we had to say ‘This appears to be… incorrect.’ You would never say ‘fraudulent’.”
Tom says that when due diligence teams would tell their contacts at the bank about high levels of defective loans — such as one bundle where the defect rate was around 50% — “Everything got… renegotiated and redone.”
In spite of the fact that Tom has been a whistle-blower in private lawsuits against banks, he says he was only recently contacted by anyone from the Dept. of Justice.
3. The Citi Exec who tried to warn everyone the sky was falling.
As the housing bubble began to swell, Richard Bowen, a former Senior VP and chief underwriter in Citi’s commercial lending group, responsible for purchasing $90 billion/year in mortgages from other lenders, noticed that “approximately 60% of these loans did not meet” the bank’s credit policy guidelines.
As the volume of mortgages increased through 2007, the rate of defective mortgages increased from 60% to in excess of 80%.
In November 2007, Bowen tried to alert Citi higher-ups, including then-chairman, and former Secretary of the Treasury, Robert Rubin, to the breakdowns in Citi’s internal controls. He requested an outside investigation, and pleaded for the executives to call him ASAP.
Bowen heard nothing back, so he tried again a month later. “I said, ‘Please, contact me! You need to know the details behind this,” he recalls.
Bowen, who was demoted before ultimately leaving the company, testified before lawmakers about his failed efforts. Citi has since admitted to some wrongdoing in various civil actions, but not a single top executive has been indicted on criminal charges.
4. How an oddball Senator from Delaware tried to goad the DOJ into properly investigating Wall Street.
Ted Kaufman had been appointed to the U.S. Senate in 2009 to fill the seat vacated by new Vice President Joe Biden. He had no intention of seeking re-election, and didn’t care about what Wall Street thought of him. So who better to be the one to push investigators to take a hard look at big banks?
After the DOJ failed to successfully prosecute a pair of Bear Sterns hedge fund managers, there were rumblings that investigators had become gun-shy about going after employees at another big bank.
So in 2009, Kaufman announced he was convening an oversight committee to see what exactly the DOJ was doing with regard to its investigation into Wall Street’s involvement in the mess.
“They started telling me about this great thing they had out in California, this web to catch the mortgage brokers who had given out the loans,” he recalls about an early meeting with investigators. “I made it clear to them — absolutely positively — This is not about L.A., this is totally about what went on on Wall Street. That’s what the bill says and that’s where the emphasis is.”
And, what do you know, one week before the hearing was to convene, the Obama administration suddenly announces the creation of the Financial Fraud Enforcement Task Force, which claimed that it would not hesitate to bring charges, where appropriate, against any level of the financial world.
“The only reason that fraud task force was announced at that point was because someone had to go to the hearing,” says Kaufman.
Unfortunately, though investigators talked a good game in the early going, the Task Force has not resulted in a single high-level prosecution tied to the 2008 crash.
5. The DOJ Prosecutor tries to explain the lack of Wall Street indictments
In spite of documents and testimony uncovered by private lawsuits and investigators for the Financial Crisis Inquiry Commission that would seem to point to rampant fraud at high levels of many banks, the DOJ has not sought a criminal indictment against any executives.
So Frontline asked Lanny Breuer, the Assistant Attorney General who should be prosecuting these offenses, why no criminal cases have come to fruition.
“We have to prove beyond a reasonable doubt — not a preponderance, not 51% — beyond any reasonable doubt that a crime was committed,” explains Breuer. “If we can not establish that, that we can not bring a criminal case.
“But we don’t let these institutions go. We’ve brought civil cases. We’ve brought regulatory cases and the entire approach here is to have a multi-pronged, comprehensive approach to what gave to the financial crisis.”
As for criticisms that his office has not made prosecuting Wall Street a priority, he responds, “I made it an incredibly top priority. But when we can’t bring a case, we have an ethical obligation not to bring those cases. But it’s not for lack of trying. Our lawyers are working incredibly hard and it’s a disservice for anyone to suggest otherwise.”
Frontline confronted Breuer with claims made by former lawyers in his office who claimed the prosecutor was overly fearful of losing a high-profile case, and that Breuer’s office had begun no investigations into Wall Street, had issued no subpoenas, reviewed no documents, nor requested any wiretaps.
“We have looked hard at the very types of matters you’re talking about,” says Breuer.
In an attempt to demonstrate that his office is not afraid of tackling Wall Street, Breuer points to the prosecution of Raj Rajaratnam on insider trading charges.
When Frontline’s Martin Smith points out that this case has nothing to do with the financial crisis of 2008, Breuer replies, “The financial crisis is multifaceted, and what we’ve had is a multi-pronged, multifaceted response. And it’s simply a fiction to say that where crimes were committed we didn’t pursue those cases… You have more people in jail today for securities fraud and bank fraud than ever before.”
But not a single Wall Street executive.
6. The moment an optimist gave up hope of ever seeing justice.
Before leaving office, Sen. Kaufman convened a hearing to see what exactly Breuer and his colleagues had been up to. At the hearing, the prosecutor did not seem to show any urgency in going after Wall Street executives.
“At that point, I just began to feel like ‘I’m being gamed here,’” recalls Jeff Connaughton, Kaufman’s former Chief of Staff and author of the book The Payoff. “Not only was no one going to be held to account for the financial crisis, but… no one was going to be held to account for the failure to hold Wall Street to account.”
7. Documentary maker wonders why he’s not having trouble finding whistle-blowers
Director Nick Verbitsky’s documentary, Confidence Game, features candid interviews with former Bear Stearns employees who have since gone on to become whistle-blower witnesses in private lawsuits against the bank.
“The ease with which I found these people and the things that they were telling me — it wouldn’t have taken a lot of effort on the part of a regulatory entity in Washington to have done this,” says Verbitsky. “What have you guys been doing? I went out and found these people in my spare time, basically.”
He says it wasn’t until a year after the public learned of his film that he was contacted by the DOJ.
8. Breuer dismisses Frontline’s ability find reliable sources
When Frontline’s Smith asks Breuer about why the DOJ is having such a problem bringing indictments when whistle-blowers seem to be readily available, the prosecutor almost loses his temper.
“I don’t accept for one moment that you all are finding whistle-blowers that we’re not,” he declares emphatically, eliciting a startled response from Smith. “What I do believe is that when we speak to the whistle-blowers we have to make a determination as to whether what they say is really a criminal case.”
9. Breuer explains why it’s okay for him to worry about the welfare of banks
In 2012, Breuer spoke at the New York Bar Association and mentioned that he loses sleep at night thinking about the impact a high-profile lawsuit could have on financial institutions.
“Is that really the job of a prosecutor — to worry about anything other than simply pursuing justice?” asks Smith.
To which Breuer responds, “I think I am pursuing justice… In any given case, I think I and prosecutors around the country, being responsible, should speak to regulators, should speak to experts. Because if I bring the case against Institution A and as a result of that case there’s some huge economic effect — if it creates a ripple effect so that suddenly counter-parties and other financial institutions or other companies that have nothing to do with this are affected badly, it’s a factor we need to know and understand.”
Kaufman says Breuer never once discussed this concern with him during any of their meetings: “That is not the job of a prosecutor, to worry about the health of the banks, in my opinion. The job of the prosecutor is to prosecute criminal behavior. It’s not to lie awake at night and decide the future of the banks.”
10. Have Wall Street execs finally dodged prosecution?
While there have been numerous civil and regulatory actions against banks, these suits do not single out individuals within the institutions, and there don’t appear to be any criminal charges coming down the pike.
Attorney David Boies, who has represented both plaintiffs and defendants in suits against banks, says that while financial institutions may continue to be put through the lawsuit mill for a while, “There are probably a lot of individuals who have breathed sighs of relief over the last two or three years.”

Watch The Untouchables on PBS. See more from FRONTLINE.

Watch The Untouchables on PBS. See more from FRONTLINE.

The Federal Reserve is Above the Law

'The war on drugs didn't help my brother': Billionaire Tetra Pak heir Hans Rausing's sister is 'increasingly convinced' by arguments for decriminalisation

  • Wealthy addicts are 'almost untouchable', claims Sigrid Rausing
  • She said her drug-addled brother and wife Eva weren't helped by state
  • 'War on drugs' and readily available methadone don't help, she argues
  • Mr Rausing was arrested after his spouse was found dead at their mansion
  • He had covered her badly decomposed body with plastic and clothes
  • Mrs Rausing, 48, had been dead for eight weeks after heart rate soared

    The sister of Tetra Pak heir Hans Rausing today said she is increasingly convinced by arguments for decriminalisation of drugs - because wealthy addicts are almost untouchable by the law.
    She said her billionaire brother and his wife were never likely to be imprisoned for their destructive habits and were given easy access to methadone and morphine by psychiatrists.
    Rich crack and heroin addicts are generally left alone if they have not committed other crimes, such as drug dealing, she said.
    Hans Rausing
    Eva Rausing
    Disturbing: Hans and Eva Rausing (pictured) were left to sink into their addiction, said the wealthy man's sister
    'Wealthy addicts, gripped by paranoia, eroded by drugs, frantic to keep their supplies flowing, are almost untouchable,' added Ms Rausing. 

    'Possession alone is unlikely to send you to prison if you are wealthy, because you are deemed unlikely to be dealing.
    'Families look on in despair, but the fact is that their addicts already live in a world where drugs are largely decriminalised.'
    In July, her heroin-addict younger brother was arrested after police found the badly decomposed body of his dead wife in the couple's squalid bedroom at their Belgravia mansion.
    Tragic: Hans Rausing's sister said he and wife Eva (pictured) were almost untouchable because of their wealth
    Tragic: Hans Rausing's sister said he and wife Eva (pictured) were almost untouchable because of their wealth
    He had banned staff from entering the couple's 'crack den' in their otherwise-immaculate £70million London home, claiming his wife was ill.
    In fact, Mrs Rausing, 48, had been dead for eight weeks, and her disturbed husband had covered her rotting body with 12 layers of clothes, blankets and plastic, sealed with industrial tape and sprayed with deodorant to mask the smell.
    Ms Rausing, writing in The Guardian today, said that well-off drug addicts like her brother have easy access to large amounts of methadone or morphine from psychiatrists.
    Despair: Sigrid Rausing said her younger brother already lived in a world where drugs were 'largely decriminalised'
    Despair: Sigrid Rausing said her younger brother already lived in a world where drugs were 'largely decriminalised'
    In a statement read out at his wife's inquest in December, Mr Rausing said he hardly remembered the run-up to his wife's death because he had been taking prescribed morphine for four years.
    The heir to his family's £4.3billion packaging fortune - and one of Britain's richest men - began abusing drugs during several years travelling in India, after he moved from Sweden to Britain in 1982.
    After one stay in rehab, he relapsed while staying with his sister.
    Heartbreakingly, she did not realise what was happening, believing that the plates of rotting food and dirt under his fingernails were just part of who he was - when in fact the dirt was heroin.

    Ms Rausing, who gives away around £20million a year to charity, said she does not think the 'heavy hand of the state' or the 'war on drugs' does anything to help people like her brother.
    Police raided her brother's mansion several years ago, after he was spotted driving erratically, and kicked in the door of his locked bedroom, said Ms Rausing, publisher of Portobello Books and Granta magazine.
    Then a year ago, on New Year's Day, she visited her brother while his wife was away, despite having been banned from their house.
    She had heard he was 'not in a good state' and that Mrs Rausing was seriously concerned about him.
    The bedroom door - still broken from the raid - was locked, and though she knew Mr Rausing could be dead or dying inside, there was little she could do.
    'Our only option of outside help at that point was to have him committed, and that, we had learned, was almost impossible,' she said.
    On July 9, he was again stopped while driving his red Bristol sports car erratically - and a warm crack pipe was found in the footwell.
    When police asked where Mrs Rausing was, his eyes welled up as he told them she was in California.
    Horrific: Mr Rausing was arrested after police found his wife's decomposed body in their Belgravia mansion
    Horrific: Mr Rausing was arrested after police found his wife's decomposed body in their Belgravia mansion
    Her body was soon after discovered in their bedroom, which was strewn with rubbish and drugs paraphenalia and swarming with flies.
    Mr Rausing's sister Sigrid is married to former Panorama producer Eric Abrahams. When they moved into their own Holland Park home in 1997, it was reportedly the most expensive house ever sold in the capital, at £20m, with the second-biggest garden after Buckingham Palace.
    Today, Ms Rausing called for addiction to be defined as an emotional illness, separately and beyond drug-use.
    She said studies had shown that a 'culture of recovery' is the best treatment, and addicts who are committed to care have as good a chance of beating their as those who have chosen it.
    Her 49-year-old brother was excused from attending his wife's inquest in December because he is being treated for drug addiction and a mental breakdown.
    'Unable to cope': Mr Rausing, one of Britain's richest men, was convicted of preventing his wife's lawful burial
    'Unable to cope': Mr Rausing, one of Britain's richest men, was convicted of preventing his wife's lawful burial
    He was instead represented by a phalanx of lawyers and public relations officials, led by the Prime Minister's older brother, Alex Cameron QC.
    He was initially arrested on suspicion of murdering his wife, but was convicted of preventing her lawful burial and handed a ten-month suspended jail term.
    Mrs Rausing was found clutching a crack pipe, after her heart-rate soared to six times its normal level. Her husband said he 'could not face the fact she was dead'.
    In a statement read to the court last month, Mr Rausing revealed that the couple had sunk deep into addiction and barely left his flat.
    He said: 'We both felt that our lives were completely hopeless.'
    The inquest heard police have been unable to discover who supplied her the drugs and her  husband said she had 'her own sources'.

Unemployment to break all-time record in 2013

The number of unemployed workers worldwide has boomed by 28 million people in the five years since the global financial crisis began, leaving 197 million people without jobs last year, according to a new report.
The numbers show a “crisis in labour markets of both advanced economies and developing economies,” according to new data from the International Labour Organization.
In 2012 alone, 4 million people joined the unemployment ranks. The figure will swell by another 5.1 million workers this year to 202 million unemployed job seekers, soaring past the all-time record of 199 million jobless people in 2009.
Quiz: How well do you remember 2012?
By 2017, some 210.6 million people will be out of work, according to the ILO, an agency of the United Nations based in Geneva. And that doesn’t include the hordes of people who have stopped searching for work and dropped out of the labor market entirely, “masking the true extent of the jobs crisis.”
Growth is slowing worldwide – with deep deceleration in China, India, Latin America and the Middle East. The Euro area suffered from “a piecemeal approach to financial sector and sovereign debt problems,” according to the report.
Investment levels have yet to recover to pre-crisis levels in many nations, due in part to uncertainty over government policies, researchers wrote. Wages, especially in developed nations, are suffering and putting pressure on consumer spending.
The dismal situation has left young people in particularly dire straits. Some 73.8 million job seekers ages 15 to 24 are without work, with many struggling to find employment from the moment they enter the job market.
The youth unemployment rate is expected to increase to 12.9% in 2017 from 12.6% now.
The global jobless rate is expected to remain at 6% through 2017, near its high in 2009.

The Real Story Behind Germany’s Gold Recall

Did you hear the news? Germany, the world’s second largest gold-holding nation, is recalling some of its gold. The Germans are bringing the physical metal – once on hold outside its borders – back in country.
This is a huge development in the world gold market. But more importantly may portend a life-changing trend that gold buyers like you and I can take to the bank.
Today let’s connect a few more dots, and talk gold…
Germany, Russia, Ronald Reagan, Clausewitz, this story has it all. Let’s start by covering a distant memory, the Cold War.
Indeed, the Cold War is not just over, it’s REALLY over. Get over it. The world is REALLY changing, and I mean in ways that you can scarcely begin to comprehend.
Yes, I know. The Soviet Union fell apart in 1991. Germany reunified – expensive as that was – and the Red Army went home to Mother Russia in the mid-1990s. (I was in Berlin, in 1991, right after I did my thing in Operation Desert Storm. Wow, I could tell you some stories about the Group of Soviet Forces in Germany, headquartered at Potsdam. Another time, perhaps.)
But now? In 2013? What’s happening? There’s big news, which the mainstream media evidently fails to comprehend, while they fixate on the wrong sorts of shiny stuff – “gun control,” for instance, and what Hollywood celebrities think about it.
Here’s the real news. Long-term, this will change your life. You paying attention?
Germany is recalling some of its central bank-owned gold from the Federal Reserve Bank in New York, as well as all “German” gold on deposit in France. It’s back to der Heimat.
Let’s back up. Why was German gold not in Germany? It’s a monetary relic of the Cold War. Back in the 1950s-1980s, the “Federal Republic of Germany” (the Bundes Republik Deutschland, or BRD – “West” Germany) was basically a potential nuclear battlefield. So part of the monetary preparation for fighting World War III in Europe was to keep West Germany’s gold away from the Russian tanks and nuclear fallout.
There was also something of a “conqueror’s legacy” about it. Post-World War II, the immediate challenge to U.S.-British-French policymakers was to keep Germany tame, considering the horrible memories of the late unpleasantness of 1939-1945. As Nobel laureate Francois Mauriac once quipped, “I love Germany so dearly that I hope there will always be two of them.”
One way for the U.S., Britain and France to keep a leash on Germany was to keep “German” gold under control outside of that country’s borders. The West German “mark” — the national currency that predated today’s euro — was thus, to a significant extent, at the mercy of people in Washington, London and Paris.
Indeed, the German gold in New York, London and Paris was a form of conquerors’ deference to maintaining “gold backing” for the mark. It’s a much longer story than this, but the point is that the policy lasted three generations.
Now, however, that issue of outside control over the German currency has come to a new turn of events. The Germans are burying the last of their grandparents who lived through World War II. And they are revisiting the rationale for storing their gold under the jurisdiction of conquering powers of World War II. There are all manner of policy implications — immediate and long term.
What will Germany do with its gold after it is back inside the traditional national boundaries? Well, we’re going to find out, aren’t we?
Germany is removing all of its gold from France. The publicly-stated reasoning is that there’s no further reason for the French to store German gold, in that both nations are part of the “euro” monetary union. Of course, just a glance at the past 200 years of history tells you that there’s likely much more to the underlying rationale.
Germany will still keep some gold in New York and London, but only after conducting a complete inventory of every bar – by weight and assay, for each serial number. (Remember what Ronald Reagan said? “Trust, but verify.”)
The monetary rationale, here, is that – despite what some banker-types want you to believe — gold plays a role in balancing terms of trade between Germany and the U.S. and Britain. In other words, the dollar-euro and pound-euro exchange system works better with gold in the gearbox.
It’s accurate to say that as history shows, gold goes to where it’s respected. As I see things, just the idea that Germany is assaying its gold, and wants some of it back, speaks volumes. The gold will boost the credibility of the German government and its central bank, and generally strengthen the German economy for all manner of reasons.
Here’s a future scenario on which to chew. Perhaps Germany might look at its gold, smile and then back out of the euro as we know it. The effect will be to ditch the southern countries — certainly Greece, Spain and Portugal — from a “European” currency.
Then Germany will do what we all know it wants to do anyhow — that is, form a “new” euro including the economies of northern European countries. Think in terms of an expanded version of the old Hanseatic League, perhaps, with Germany as the center of gravity. Very Clausewitz, no? And there’s the possibility of offering membership to Italy (or perhaps just “northern” Italy).
Oh, and don’t dismiss the possibility of a German-Russian monetary alliance. They already have a strong, and growing energy alliance. Why not start coordinating things in terms of currency as well. We’ll see, right?
Best wishes…
Byron W. King

Assistant Attorney General Admits On TV That In The US Justice Does Not Apply To The Banks

Those who watched Frontline's special on why nobody has been prosecuted on Wall Street titled appropriately "The Untouchables" didn't learn much new. The rehash of ideas presented is what has been well known for years - namely that when it comes to prosecuting Wall Street criminals nothing will ever happen, because as Bill Gross tweeted " Its not Republican in politics. Its not Dem in politics. Its money in politics" and all the money in politics comes from Wall Street, which happens to be the ultimate ruler of the United States of America, pushing levers here and pulling stringer there to give the impression the constitutional republic is still alive. It isn't - this country has become an unchecked despotism of those in charge of money creation and who control capital - just the thing Andrew Jackson warned against. One thing we did learn, was courtesy of Assistant Attorney General Lenny Breuer who made it very clear that when it comes to the concept of justice the banks are and always have been "more equal" than others. He does so in such shocking clarity and enthusiasm that it is a miracle that this person is still employed by the US Department of Justice.
To wit from the transcript:
MARTIN SMITH: You gave a speech before the New York Bar Association. And in that speech, you made a reference to losing sleep at night, worrying about what a lawsuit might result in at a large financial institution.


MARTIN SMITH: Is that really the job of a prosecutor, to worry about anything other than simply pursuing justice?

LANNY BREUER: Well, I think I am pursuing justice. And I think the entire responsibility of the department is to pursue justice. But in any given case, I think I and prosecutors around the country, being responsible, should speak to regulators, should speak to experts, because if I bring a case against institution A, and as a result of bringing that case, there’s some huge economic effect — if it creates a ripple effect so that suddenly, counterparties and other financial institutions or other companies that had nothing to do with this are affected badly — it’s a factor we need to know and understand.
In other words, no criminal charges can be levied against anyone who engaged in the crimes leading to the great financial crisis of 2008 because, get this, the implications of pursuing justice may have destabilizing implications!
In other words, the banker threat of Mutual Assured Destruction has metastasized from the legislative, where in 2008 Hank Paulson demanded a blank check from Congress to spend it on whatever he wishes, "or else...", and has fully taken over the Judicial, where there is Justice for all... and no "Justice" for those who are systemically important.
Ted Kaufman summarizes:
TED KAUFMAN: That was very disturbing to me, very disturbing. That was never raised at any time during any of our discussions. That is not the job of a prosecutor, to worry about the health of the banks, in my opinion. Job of the prosecutors is to prosecute criminal behavior. It’s not to lie awake at night and kind of decide the future of the banks.
Alas Ted, it appears it is.
Frontline's conclusion was perfectly expected: "to date, not one senior Wall Street executive has been held
criminally liable by the Department of Justice for activities related to
the financial crisis
We now know why: it is because of people like this:
Lanny A. Breuer was unanimously confirmed as Assistant Attorney General for the Criminal Division on April 20, 2009.
As head of the Criminal Division, Mr. Breuer oversees nearly 600 attorneys who prosecute federal criminal cases across the country and help develop the criminal law. He also works closely with the nation’s 94 U.S. Attorneys’ Offices in connection with the investigation and prosecution of criminal matters in their districts. Mr. Breuer is a national leader on a range of federal law enforcement priorities, including financial fraud, health care fraud, public corruption, and violence along the Southwest Border. He has also been a leading voice on policy issues related to criminal law enforcement, including the scope of prosecutors’ discovery obligations in federal criminal cases and sentencing disparities between crack and powder cocaine offenses. Mr. Breuer regularly testifies before Congress on the Administration’s policy initiatives and advises the Attorney General and the White House on matters of criminal law.  Mr. Breuer also serves as the Department's representative on the Atrocities Prevention Board, which President Obama announced in April 2012.  For his work as Assistant Attorney General, the National Law Journal named Mr. Breuer a "Visionary" in the Washington, D.C. legal community, and he was recently ranked sixth on Ethisphere’s list of The 100 Most Influential People in Business Ethics.

Mr. Breuer began his legal career in 1985 as an Assistant District Attorney in Manhattan, where he prosecuted violent crime, such as armed robbery and gang violence, white collar crime, and other offenses. In 1989, he joined the law firm of Covington & Burling LLP, where he worked until 1997, when he joined the White House Counsel’s Office as Special Counsel to President William Jefferson Clinton. As Special Counsel, Mr. Breuer assisted in defending President Clinton in the Senate impeachment trial.

Mr. Breuer returned to Covington in 1999 as co-chair of the White Collar Defense and Investigations practice group, where he specialized in white collar criminal defense and complex civil litigation and represented individuals and corporations in matters involving high-stakes legal risks. He also vice-chaired the firm’s Public Service Committee. At Covington, Mr. Breuer developed a reputation as one of the top defense lawyers in the country.

"We're Going to Kill the Dollar"

By Mike Whitney
January 22, 2013 "Information Clearing House" - “How do you solve a problem when you’re running a 10% fiscal budget deficit? You are not going to get growth without private sector credit demand. The government’s idea right now is that we’re going to export our way out of this, and when I asked a senior member of the Obama administration last week how are we going to grow exports if we will not allow nominal wage deflation? He said, “We’re going to kill the dollar.” Kyle Bass interview.
Last week, amid growing rumors of a global currency war, the Fed’s balance sheet broke the $3 trillion-mark for the first time in history. According to blogger Sober Look: “For the first time since this program was launched (QE) it is starting to have a material impact on bank reserves … which spiked last week. 2013 will look quite different from last year. The monetary base will be expanded dramatically as long as the current securities purchases program is in place. ‘Money printing” is in now full swing.’” (“Fed’s balance sheet grows above $3 trillion, finally impacting the monetary base”, Sober Look)
Take a minute and consider the implications of the Fed’s money printing operations in relation to the above quote by market analyst Kyle Bass. Can you see what’s happening?
The Fed is acting exactly as one would expect it to act given it’s stated intention to increase inflation (currency debasement) while intensifying the class war at the same time.
How is the Fed waging class war, you ask?
Fed chairman Bernanke has been a big supporter of deficit reduction, which is code for slashing public spending. The recent “fiscal cliff” settlement raises taxes immediately on working people by ending the payroll tax holiday. As Bloomberg notes: “Everybody took a two percentage-point pay cut.” This is bound to impact consumer spending and confidence which dropped sharply last week. Here’s more from Bloomberg:
“Payroll taxes went up. As part of its budget agreement on Jan. 1, Congress agreed to let the tax, used to pay for Social Security benefits, return to its 2010 level of 6.2 percent from 4.2 percent. That reduces the paycheck by about $83 a month for someone who earns $50,000.” (Bloomberg)
So all the worker bees (you and me) have less money to spend, which means that there’s going to be less activity, higher unemployment and slower growth. This is what all the liberal economists have been warning about for over 3 years, that is, if the government withdraws its fiscal support for the economy by reducing the budget deficits too soon, the economy will slip back into recession.
So what is the Fed doing to counter this slide and to create the illusion that nutcases who preached “austerity is good” were right?
Well, the Fed is buying mortgage-backed securities, right? So the Fed is actually dabbling in fiscal policy, assuming a role that is supposed to be played by the Congress. Now, I realise that the buying of MBS doesn’t precisely fit the definition of fiscal policy because the Fed doesn’t collect taxes and redistribute the revenue. But it sure doesn’t fit the description of monetary policy either, now does it? The Fed is not setting rates to control the flow of credit into the system. No, the Fed is buying stuff; financial assets that provide credit to loan applicants who are purchasing hard assets. That ain’t monetary policy, my friend. It is fiscal policy writ large.
The Fed is currently purchasing $45 bil per month in US Treasuries to push down long-term interest rates in order to help the banks sell more mortgages so they can reduce their stockpile of distressed homes.
And, the Fed is buying $40 billion of MBS per month to help the banks clear their books of left-over MBS and to provide funding for the banks to generate new mortgages.
Also, 95% of all new mortgages are financed through Fannie and Freddie. In other words, the government is providing all the money and taking all the risk, while all the profits go to Wall Street.
Let’s review:
Fannie and Freddie’s policy is designed to help the banks
The Fed’s MBS purchasing program is designed to help the banks.
The Fed’s QE (UST purchases) policy is designed to help the banks.
Do you see a pattern here? It’s all for the banks, which is why Marx was correct when he referred to “political economy” because the economy doesn’t operate according to free market principals. It is organized in a way that best achieves the objectives of the constituency that controls the levers of political power.
Now guess which constituency controls those levels of political power presently?
If you guessed “the Wall Street banks”, give yourself a pat on the back.
So, what effect is this going to have on policy?
Well, to some extent we already know the answer to that question because–as we pointed out earlier–the policy is shaped to benefit the banks. Even so, an analogy may be helpful to better grasp what’s going on.
Let’s say you have $5 million that you want to put into manufacturing. In fact, you have decided you want to open your own factory and produce widgets of one kind or another to sell to the public. Eventually, you whittle your options down to two choices; you will either produce a modern line of electric cars to reduce emissions and pave the way for new technologies or you will make hula hoops. So, what’s it going to be?
Fortunately, for you, the Fed announces a new program that will provide $45 billion per month “indefinitely” to manufacturers who provide low interest loans to people who want to buy hula hoops.
“Yipee”, you say. “I will abandon my plan to save the planet from poisonous greenhouse gases and make my fortune selling hula hoop bonds to the Fed instead.”
Isn’t this what’s happening? None of this has anything to do with lowering unemployment, strengthening the recovery or increasing growth. It’s all just a way of funneling money to powerful constituents. And one thing is certain, that if the Fed creates the demand for a product (like MBS), then someone is going to fill that demand whether it helps the broader economy or not.
But if the Fed can buy mortgage bonds, then why can’t they buy infrastructure bonds? What’s the difference?
The difference is that mortgage bonds boost profits for bankers, whereas infrastructure bonds merely provide jobs for people who need them. In other words, the difference is not between fiscal and monetary, but between the “haves” and the “have nots”, which is the same as saying that the Fed’s policies are based on class interests. And, that brings back to our original comment by Kyle Bass, who wonders how the US can grow its way out of its present predicament (big budget deficits and weak exports) without more “private sector credit demand”?
Great question. But you can see that Fed chairman Bernanke has already tipped his hand. The Fed is going to keep waving that “$45 billion per month” carrot in front of the banks until they rev-up the credit flywheel and create a new regime of toxic mortgages. (The new Consumer Financial Protection Bureau’s rule on “Qualified Mortgage”, which requires neither a down payment nor credit scores, makes this prospect even more likely.) Bernanke is playing the role that the repo market played before the Crash of ’08, that is, the Fed is promising to buy all the complex bonds (MBS) the banks produce off balance sheet to keep money flowing to the banks. It’s just like the free market, except there’s nothing free about it. It’s all fake and Bernanke doesn’t care if you know it.
$45 billion per month isn’t chump change. It’s enough to inflate housing prices, to employ more out-of-work construction workers, to grow the economy, and to save bank balance sheets that are deep in the red. At the same time, the Fed’s ballooning balance sheet will put downward pressure on the dollar which will increase exports while lowering real-inflation adjusted wages. Like the man said, “We’re going to kill the dollar.”
This is the Fed’s plan: Bail out the banks, transfer the banks bad bets onto its own balance sheet, hammer the greenback, slash wages (via inflation), boost exports, and pump as much money as possible into the unproductive, overbuilt black hole we call the US housing market.
Of course, President Obama could avoid all this nonsense and just launch a government-funded jobs program that would snap the economy out of its coma, increase demand, and turbo-charge GDP, but that would be way too easy. And probably bad for profits, too.
Mike Whitney lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at
This article was originally posted at Counterpunch

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China’s Buying A Fleet Of Russian Bombers Perfect For Taking On The US Navy

Business Insider – by David Cenciotti and Richard Clements, The Aviationist
Chinese websites are again reporting that Russia has agreed to sell Beijing the production line for the Tupolev Tu-22M3 bomber at a cost of $1.5 billion.
Once in service with the Chinese Naval Air Forces the Tu-22M3 will be known as the “H-10″.
The deal struck with Russia includes 36 aircraft: a batch of 12 followed by a second batch of 24 additional bombers.
The Tu-22 will be employed in the maritime attack role and used to attack targets from low levels to avoid radar detection.
The Tu-22 is a Soviet supersonic, swing-wing, long-range strategic and maritime strike bomber. It was developed during the Cold War and is among the closest things to a modern stealth bomber. However, it will get updated with indigenous systems and an extended range making it a significant threat to many latest generations weapon systems.
That’s even more true if the deal with Russia includes the Raduga Kh-22 (AS-4 ‘Kitchen’) long-range anti-ship missile, in which case this could be a significant change in the strategic balance of the region.
The Tu-22 bombers will give China another tool to pursue the area denial strategy in the South China Sea and the Pacific theatre; a fast platform to launch cruise missiles, conventional or nuclear weapons in various regional war scenarios.
In other words, a brand new threat to the U.S. Navy in the region.
Read more:

Four colleges to cut faculty hours to Part-time status, blames Obamacare

Four public colleges and universities:  Florida’s Palm Beach State College, Pennsylvania’s Community College of Allegheny County, Ohio’s Youngstown State University, and New Jersey’s Kean University, are all planning to move adjunct and “contingent” faculty members to part-time status in order to avoid an Obamacare provision requiring businesses with 50 or more full-time employees to provide health coverage for at least 95 percent of their workers.
Gwen Bradley, a senior program officer for the American Association of University Professors, said the AAUP’s National Committee on contingent faculty was “deeply concerned” by the emerging trend.
“Adjuncts are very precarious anyway,” said Bradley. “They usually have very low wages, and are often already below the thresholds for health care. But for those people who have it, being cut down to lose it is very devastating.”
Only contingent faculty—as opposed to full-time, tenure-track faculty—would be affected by the change in policy. Since the Affordable Care Act requires that employers provide health care to any employee who works 30 hours per week or more, universities like Palm Beach State College have opted to cap the time that contingent faculty are allowed to work at just below the 30-hour benchmark.
“It’s about having their course load reduced so they’re teaching less and having less paid for their salaries,” said Craig Smith, the director of the American Federation of Teacher’s higher education division. For many contingent faculty members, “it’s not like they were receiving health care in the first place.”
Teachers’ associations like AAUP and AFT are bracing for the shift. Next week, AFT will host a webinar for its members addressing “the implications of the Affordable Care Act for contingent faculty.” In the meantime, both organizations are hoping the federal government will require universities to count time spent outside the classroom as part of adjunct faculty’s work hours.
Bradley applauded a recent IRS ruling which she said determined “that failing to take into account grading and prep is not reasonable” when it comes to calculating employee hours. Smith said that AFT had been “making comments to the Treasury Department and encouraging them to write the regulations in such a way that for part-time faculty, the hours they work are counted correctly.”

GASPARINO: How To Nail Stevie Cohen

GASPARINO: How To Nail Stevie Cohen--video link

Feds pressure Martoma to flip on Steven Cohen.
Charlie Gasparino and former FBI special agent Mark Rossini break down the details of the most lucrative insider-trading case in U.S. history.
A former portfolio manager for Steven A. Cohen’s SAC Capital Advisors was charged with what U.S. prosecutors called a record-setting insider-trading scheme that netted as much as $276 million for the hedge fund.
Mathew Martoma, 38, traded on inside tips about clinical trials of bapineuzumab, a drug intended to treat Alzheimer’s disease, prosecutors in the office of Manhattan U.S. Attorney Preet Bharara said in a criminal complaint unsealed today. The U.S. Securities and Exchange Commission sued Martoma, his former hedge fund and the doctor who allegedly passed him the tips.
Martoma allegedly advised Cohen to sell shares of Wyeth LLC (PFE) and Elan Corp., the companies that were developing the drug, before bad news about its performance was announced.  Cohen’s firm sold its Elan and Wyeth holdings to avoid losses and profited from short positions in the stocks, prosecutors said.
“Mathew Martoma and his hedge fund benefitted from what might be the most lucrative inside tip of all time,” Bharara said at a press conference today. “This is certainly the most lucrative insider-trading scheme ever charged.”
Continue reading at Bloomberg...
The SEC put together this chart of the ill-gotten gains.

Steven's Web of Deceit - SAC Traders Leading Feds to Cohen
As the government closes in on Cohen and SAC, here's a look at the string of former employees that the government uncovered, drawing investigators closer to Cohen.
Choo Beng Lee: Lee was a former SAC analyst who pled guilty to two counts of insider trading. His cooperation agreement implies that he acted improperly while employed by SAC, even though the crimes that brought him down took place after he'd left the firm. Lee tried to get rehired by Cohen while he was working with prosecutors as part of the government's investigation.
Noah Freeman: Freeman is a former SAC analyst who became a cooperating witness for the government after being accused of insider trading while at Cohen's firm. His work helped to ensnare his friend and fellow SAC alum Donald Longueil.
Donald Longueil: Longueil was an analyst at SAC subsidiary CR Intrinsic (the same unit where Maroma worked). He pled guilty to insider trading while at Cohen's firm after telling his friend Noah Freeman that he'd destroyed his computer's hard drive and spread the pieces among several dumpsters throughout Manhattan.
Jon Horvath: Horvath worked as a tech analyst at SAC subsidiary Sigma Capital Management. He was arrested along with Anthony Chiasson, a fellow SAC alum and founder of Level Global. Horvath pled guilty to insider trading. He's now cooperating with the government.
Michael Steinberg: Steinberg was Jon Horvath's superviser at Sigma Capital. He's still employed at SAC, but was recently put on leave. Steinberg is listed as an unindicted co-conspirator in the insider trading scheme that involved Horvath.
Jonathan Hollander: Hollander also worked at CR Intrinsic. He settled with the government after being accused of using inside information to trade stocks in his personal account, rather than for SAC.
Anthony Chiasson: Chiasson is an ex-SAC trader who is currently on trial for insider trading at the firm he co-founded in 2003, Level Global. As part of his defense, Chiasson's lawyers are trying to show that fellow SAC alum and Level Global co-founder David Ganek made trades that were similar to those made by Chiasson.

The Trillion-dollar Coin: Joke or Game Changer?

The trillion-dollar coin actually represents one of the most important principles of popular prosperity ever conceived: the creation of money by sovereign governments, debt-free. 
Last week on The Daily Show, Jon Stewart characterized the proposal that the White House circumvent the debt ceiling by minting a trillion-dollar coin as an attempt to "just make shit up."
Economist and New York Times columnist Paul Krugman responded with a critical blog post accusing Stuart of a "lack of professionalism" for not taking the trillion-dollar coin seriously. However, Krugman himself had called the idea "silly." He thought it was just less silly -- and less dangerous -- than playing with the debt ceiling, which was itself an unconstitutional shackle on the Treasury's ability to pay debts already incurred by Congress.
Stewart responded on Jan. 15 that he stood by his "ignorant conclusion that a trillion-dollar coin minted to allow the president to circumvent the debt ceiling, however arbitrary that may be, is a stupid f*cking idea."
It's all good fun -- or is it? Most commentators have missed the real significance of the trillion-dollar coin. It is not just about political gamesmanship. For centuries, a secret battle has raged over who should create the nation's money supply -- governments or banks. Today, all that is left of the U.S. Treasury's money-creating power is the ability to mint coins. If we the people want to reclaim that power so that we can pay our obligations when due, the Treasury will need to mint more than nickels and dimes. It will need to create some coins with very large numbers on them.
To bail out the banks, the Federal Reserve, as head of the private banking system, issued over $2 trillion as "quantitative easing," simply by creating the money on a computer screen. Congress, the White House, and the Treasury all rolled over and acquiesced. When it was proposed that the government bail itself out of its budget woes by minting a $1 trillion coin, the Federal Reserve said it would not accept the Treasury's legal tender. And the White House again acquiesced, evidently embarrassed to have entertained this "ludicrous" alternative.
Somehow we have come to accept that it is less silly for the central bank to create money out of thin air and lend it at near zero interest to private commercial banks, to be re-lent to the public and the government at market interest rates, than for the government to simply create the money itself, debt- and interest-free.
The banks obviously have the upper hand in this game; and they've had it for the last 2-1/2 centuries, making us forget that any other option exists. We have forgotten our historical roots. The American colonists did not think it was silly when they escaped a grinding debt to British bankers and a chronically short money supply by printing their own paper scrip, an innovative solution that allowed the colonies to thrive.
In fact, the trillion-dollar coin represents one of the most important principles of popular prosperity ever conceived: national debt-free money creation. Some of our greatest leaders, including Benjamin Franklin, Thomas Jefferson, and Abraham Lincoln, promoted the essential strategy behind it: that debt-free money offers a way to break the shackles of debt and free the nation to realize its full potential.
We have lost not only the power to create our own money but the memory that we once had that power. With the help of such campaigns as Occupy Wall Street, Strike Debt, and the Free University, however, we are starting to re-learn the great secret of money: that how it gets created determines who has the power in society -- we the people, or they the bankers.
It is no secret who has that power today. In the great bailout of 2008, banks were rewarded for making irresponsible and fraudulent gambles in the subprime mortgage scandal, with no one serving time in jail. Then there was the robosigning scandal, in which banks committed criminal fraud and came away with a slap on the wrist.  ow we are seeing the LIBOR scandal unfold. While a commoner might get 10-20 years for robbing a bank, bank executives get huge bonuses for robbing us.
We may rail against the banks and demand change, but nothing will change until we grasp their fundamental secret, the foundation of their power: that those who create the nation's money control the nation. By mechanisms explained elsewhere, nearly the entire money supply today is created by banks.
Remembering Our Roots: A Refresher Course
Benjamin Franklin was called called "the Father of Paper Money." He argued before the British Parliament that government-issued money had allowed the colonies to escape the yoke of debt, to thrive and grow. The king, urged by the Bank of England, responded by forbidding all new issues of paper scrip. The colonial economy then sank into a depression, and the colonists rebelled.  They won the revolution, but the power to create money was lost to a private banking oligarchy modeled on the one dominated by the Bank of England.
Fourscore and six years later, President Abraham Lincoln boldly took back the money power during the Civil War. To avoid exorbitant interest rates of 24 percent to 36 percent, he decided to print money directly from the US Treasury as US Notes or "greenbacks." The issuance of $450 million in greenbacks was key to funding not only the North's victory in the war but an array of pivotal infrastructure projects, including a transcontinental railway system.
Lincoln was assassinated, however and,the greenback program was quickly discontinued. Repeated popular attempts to revive it failed. In 1872, according to Lynn Wheeler in Triumphant Plutocracy: The Story of American Public Life from 1870 to 1920, New York bankers sent a letter to every bank in the United States, urging them to fund newspapers that opposed government-issued money. The letter read in part:
"Dear Sir: It is advisable to do all in your power to sustain such prominent daily and weekly newspapers... as will oppose the issuing of greenback paper money, and that you also withhold patronage or favors from all applicants who are not willing to oppose the Government issue of money. Let the Government issue the coin and the banks issue the paper money of the country... [T]o restore to circulation the Government issue of money, will be to provide the people with money, and will therefore seriously affect your individual profit as bankers and lenders."
Bank-created money (which now includes electronic money) could be rented at a profit to the people. The "people's money" was limited to coin, which today composes less than one ten-thousandth of M3, the broadest measure of the money supply.
Lincoln's assassination and the abandonment of debt-free greenbacks effectively marked the exchange of one type of slavery (race-based) for another (wage- and debt-based). As a result, the American government and American people are so heavily mired in debt today that only a radical overhaul of the monetary system can free us.
Gimmick or Game-Changer?
That is the real context and backstory of the trillion-dollar coin. The stakes are much higher today than just fending off the debt ceiling. We the people need to take back the power to issue our own money, and coins are the only means left to us to do it.
The idea of minting large denomination coins to solve economic problems was evidently first suggested by a chairman of the Coinage Subcommittee of the U.S. House of Representatives in the early 1980s. He pointed out that the government could pay off its entire debt with some billion-dollar coins. The Constitution gives Congress the power to coin money and regulate its value, and no limit is put on the value of the coins it creates. In Web of Debt (2007), I suggested that to solve the government's debt problems today these would need to be trillion dollar coins.
In legislation initiated in 1982, however, Congress chose to impose limits on the amounts and denominations of most coins. The one exception was the platinum coin, which a special provision allowed to be minted in any amount for commemorative purposes.
An attorney named Carlos Mucha, blogging under the pseudonym Beowulf, proposed issuing a platinum coin to capitalize on this loophole, after hearing me mention the trillion-dollar coin in a Thom Hartmann interview. At first it was just an amusing exercise.  But with the endless gridlock in Congress over the debt ceiling, it got picked up by serious economists as a way to checkmate the deficit hawks.
Philip Diehl, former head of the U.S. Mint and co-author of the platinum coin law, confirmed that the coin would be legal tender: "In minting the $1 trillion platinum coin, the Treasury Secretary would be exercising authority which Congress has granted routinely for more than 220 years... under power expressly granted to Congress in the Constitution (Article 1, Section 8)."
Warren Mosler, one of the founders of Modern Monetary Theory, reviewed the idea and concluded it would work operationally. The funds would simply be new reserve balances at the Fed rather than new Treasury securities.
Joe Firestone pointed out that the trillion-dollar coin could solve the government's debt problems once and for all, putting was in its grasp the power to replace austerity with the abundance enjoyed by our forefathers.
The trillion-dollar coin can raise cries of "hyperinflation!" It evokes images of million-mark notes filling wheelbarrows. But as economist Michael Hudson observes: "Every hyperinflation in history has been caused by foreign debt service collapsing the exchange rate. The problem almost always has resulted from wartime foreign currency strains, not domestic spending."
Prof. Randall Wray explains that the coin would not circulate but would be deposited in the government's account at the Fed, so it could not inflate the circulating money supply. The budget would still need Congressional approval. To keep a lid on spending, Congress would just need to abide by some basic rules of economics. It could spend on goods and services up to full employment without creating price inflation (since supply an d demand would rise together). After that, it would need to tax -- not to fund the budget, but to shrink the circulating money supply and avoid driving up prices with excess demand.
Time to Take Back the Money Power
The current economic crisis cannot be solved with the thinking that created it. There is simply not enough money in the system to fund the services we desperately need, pay down the debt, and keep taxes affordable.  The money supply has shrunk by $4 trillion since 2008, according to the Fed's own website. The only solution is to add more money to the real, producing economy; And that means some congressionally-mandated entity needs to create it, either the Fed or the Treasury.
The Fed has declined. In flatly rejecting the Treasury's legal tender, the Fed as representative of the banks is asserting itself as outranking the elected representatives of the people.  If the Fed won't acknowledge the coins created by the government, perhaps the government needs to charter a publicly-owned bank that will.
We have a chance today to end the charade of big money gridlock politics, as well as the reign of the big banks. We have the power to choose prosperity over austerity. But to do it, we must first restore the power to create money to the people.
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Does China Plan To Establish 'China Cities' And 'Special Economic Zones' All Over America?

Michael Snyder, Contributor
Activist Post

What in the world is China up to? Over the past several years, the Chinese government and large Chinese corporations (which are often at least partially owned by the government) have been systematically buying up businesses, homes, farmland, real estate, infrastructure and natural resources all over America. In some cases, China appears to be attempting to purchase entire communities in one fell swoop. So why is this happening?  Is this some form of "economic colonization" that is taking place?

Some have speculated that China may be intending to establish "special economic zones" inside the United States modeled after the very successful Chinese city of Shenzhen.  Back in the 1970s, Shenzhen was just a very small fishing village, but now it is a sprawling metropolis of over 14 million people.  Initially, these "special economic zones" were only established within China, but now the Chinese government has been buying huge tracts of land in foreign countries such as Nigeria and establishing special economic zones in those nations.  So could such a thing actually happen in America?

Well, according to Dr. Jerome Corsi, a plan being pushed by the Chinese Central Bank would set up "development zones" in the United States that would allow China to "establish Chinese-owned businesses and bring in its citizens to the U.S. to work."  Under the plan, some of the $1.17 trillion that the U.S. owes China would be converted from debt to "equity".  As a result, "China would own U.S. businesses, U.S. infrastructure and U.S. high-value land, all with a U.S. government guarantee against loss."  Does all of this sound far-fetched?  Well, it isn't.  In fact, the economic colonization of America is already far more advanced than most Americans would dare to imagine.

So how in the world did we get to this point?  A few decades ago, the United States was the unchallenged economic powerhouse of the world and China was essentially a third world country. So what happened?

Well, we entered into a whole bunch of extremely unfavorable "free trade" agreements, and countries such as China began to aggressively use "free trade" as an economic weapon against us.
 Over the past decade, we have lost tens of thousands of businesses and millions of jobs to China. When the final numbers for 2012 come out, our trade deficit with China for the year will be well over 300 billion dollars, and that will be the largest trade deficit that one country has had with another country in the history of the world.

Overall, the U.S. has run a trade deficit with China over the past decade that comes to more than 2.3 trillion dollars.  That 2.3 trillion dollars could have gone to U.S. businesses and U.S. workers, and in turn taxes would have been paid on all of that money.  But instead, all of that money went to China.

Rather than just sitting on all of that money, China has been lending much of it back to us - at interest.  We now owe China more than a trillion dollars, and our politicians are constantly pleading with China to lend more money to us so that we can finance our exploding debt.

Today, the U.S. government pays China approximately 100 million dollars a day in interest on the debt that we owe them.  Those that say that the U.S. debt "does not matter" are being incredibly foolish.
 So thanks to our massive trade deficit and our exploding national debt, China is systematically getting wealthier and the United States is systematically getting poorer.

And now China is starting to use a lot of that wealth to aggressively expand their power and influence around the globe.

But isn't it more than a bit far-fetched to suggest that China may be planning to establish Chinese cities and special economic zones in America?

Not really.

Just look at what has already happened up in Canada.  It is well-known that the Chinese population of Vancouver, Canada has absolutely exploded in recent years.  In fact, the Vancouver suburb of Richmond is now approximately half Chinese.  The following is an excerpt from a BBC article...
Richmond is North America's most Asian city - 50% of residents here identify themselves as Chinese. But it's not just here that the Chinese community in British Columbia (BC) - some 407,000 strong - has left its mark. All across Vancouver, Chinese-Canadians have helped shape the local landscape.
A similar thing is happening in many communities along the west coast of the United States.  In fact, Chinese citizens purchased one out of every ten homes that were sold in the state of California in 2011.

But in other areas of the United States, the Chinese are approaching things much more systematically.

For example, as I have written about previously, a Chinese group identified as "Sino-Michigan Properties LLC" has purchased 200 acres of land near the town of Milan, Michigan.  Their stated goal is to build a "China City" that has artificial lakes, a Chinese cultural center and hundreds of housing units for Chinese citizens.

In other instances, large chunks of real estate in major U.S. cities that are down on their luck are being snapped up by Chinese investors.  Just check out what a Fortune article from a while back says has been happening over in Toledo, Ohio...
In March 2011, Chinese investors paid $2.15 million cash for a restaurant complex on the Maumee River in Toledo, Ohio. Soon they put down another $3.8 million on 69 acres of newly decontaminated land in the city's Marina District, promising to invest $200 million in a new residential-commercial development. That September, another Chinese firm spent $3 million for an aging hotel across a nearby bridge with a view of the minor league ballpark.
Toledo is being promoted to Chinese investors as a "5-star logistics region".  From Toledo it is very easy to get to Chicago, Detroit, Cleveland, Pittsburgh, Columbus and Indianapolis...
With a population of 287,000, Toledo is only the fourth largest city in Ohio, but it lies at the junction of two important highways -- I-75 and I-80/90. My vision is to make Toledo a true international city, Toledo's Mayor Mike Bell told the Toledo Blade.
But some of these deals appear to be about far more than just making "investments".  According to the Idaho Statesman, a Chinese company known as Sinomach (which is actually controlled by the Chinese government) was actually interested in developing a 50 square mile self-sustaining "technology zone" south of the Boise airport...
A Chinese national company is interested in developing a 10,000- to 30,000-acre technology zone for industry, retail centers and homes south of the Boise Airport.
Officials of the China National Machinery Industry Corp. have broached the idea — based on a concept popular in China today — to city and state leaders.
 The article suggested that this "technology zone" would be modeled after similar projects that already exist in China, and that Chinese officials were conducting similar negotiations with other U.S. states as well...
Sinomach is not looking only at Idaho.
The company sent delegations to Ohio, Michigan and Pennsylvania this year to talk about setting up research and development bases and industrial parks. It has an interest in electric transmission projects and alternative energy as well.
The technology zone proposal follows a model of science, technology and industrial parks in China — often fully contained cities with all services included.
Thankfully the deal in Idaho appears to be stalled for now, but could we soon see China establish special economic zones in other communities all around America?

The Chinese certainly do seem to be laying the groundwork for something.  They have been voraciously gobbling up important infrastructure all over the country.  The following comes from a recent American Free Press article...
In addition to already owning vital ports in Long Beach, Calif. and Boston, Mass., the China Ocean Shipping Company is eyeing major ports on the East Coast and Gulf of Mexico. China also owns access to ports at the entry and exit points of the Panama Canal.
And due to fiscal woes plaguing many American cities and states, U.S. legislators have been actively seeking out Chinese investors. In one of the worst cases, Baton Rouge, La., Mayor Kip Holden offered the Chinese government ownership and operating rights to a new toll way system if the Chinese would provide the funding to build it.
Does it make sense for the Chinese to own some of our most important ports?

Isn't there a national security risk?

Sadly, there isn't much of anything that our politicians won't sell these days as long as someone is willing to flash a lot of cash.

The Chinese have also been busy buying up important real estate on the east coast as a recent Forbes article explained….
According to a recent report in the New York Times, investors from China are 'snapping up luxury apartments' and are planning to spend hundreds of millions of dollars on commercial and residential projects like Atlantic Yards in Brooklyn. Chinese companies also have signed major leases at the Empire State Building and at 1 World Trade Center, the report said.
But it is not only just land and infrastructure that the Chinese have been buying up.
They have also been purchasing rights to vital oil and natural gas deposits all over the United States.

There have been two Chinese companies that have been primarily involved in this effort.
The first is the China National Offshore Oil Corporation (CNOOC).  According to Wikipedia, CNOOC is 100 percent owned by the Chinese government…
CNOOC Group is a state-owned oil company, fully owned by the Government of the People’s Republic of China, and the State-Owned Assets Supervision and Administration Commission of the State Council (SASAC) performs the rights and obligations of shareholder on behalf of the government.
  The second is Sinopec Corporation.  Sinopec Group is the largest shareholder (approx. 75% ownership) in Sinopec Corporation.  And as the Sinopec website tells us, Sinopec Group is fully owned by the Chinese government…

Sinopec Group, the largest shareholder of Sinopec Corp., is a super-large petroleum and petrochemical group incorporated by the State in 1998 based on the former China Petrochemical Corporation. Funded by the State, it is a State authorized investment arm and State-owned controlling company.
So whenever you see CNOOC or Sinopec, you can replace those names with the Chinese government.  The Chinese government essentially runs both of those companies.

And as you can see from the following list compiled by the Wall Street Journal, those two companies have been extremely aggressive in buying up rights to oil and natural gas all over the nation...
Colorado: Cnooc gained a one-third stake in 800,000 acres in northeast Colorado and southeast Wyoming in a $1.27 billion pact with Chesapeake Energy Corp.
Louisiana: Sinopec has a one-third interest in 265,000 acres in the Tuscaloosa Marine Shale after a broader $2.5-billion deal with Devon Energy.
Michigan: Sinopec gained a one-third interest in 350,000 acres in a larger $2.5 billion deal with Devon Energy.
Ohio: Sinopec acquired a one-third stake in Devon Energy’s 235,000 Utica Shale acres in a larger $2.5 billion deal.
Oklahoma: Sinopec has a one-third interest in 215,000 acres in a broader $2.5 billion deal with Devon Energy.
Texas: Cnooc acquired a one-third interest in Chesapeake Energy’s 600,000 acres in the Eagle Ford Shale in a $2.16-billion deal.
Wyoming: Cnooc has a one-third stake in 800,000 acres in northeast Colorado and southeast Wyoming after a $1.27 billion pact with Chesapeake Energy. Sinopec gained a one-third interest in Devon Energy’s 320,000 acres as part of a larger $2.5 billion deal.
Gulf of Mexico: Cnooc Ltd. separately acquired minority stakes in some of Statoil ASA’s leases as well as six of Nexen Inc.’s deep-water wells.
So why is the U.S. government allowing this? That is a very good question. For a nation that purports to be pursuing "energy independence", we sure do have a funny way of going about things.

Unfortunately, the sad truth is that China is absolutely mopping the floor with the United States on the global economic stage.  China is rising and America is in an advanced state of decline.  Global economic power has shifted dramatically and most Americans still don't understand what has happened.

The following are 44 more signs of how dominant the economy of China has become...

1. A Chinese firm recently made a $2.6 billion offer to buy movie theater chain AMC.

2. A different Chinese firm made a $1.8 billion offer to buy aircraft maker Hawker Beechcraft.

3. In December it was announced that a Chinese group would be purchasing AIG's plane leasing unit for $4.23 billion.

4. It was recently announced that the Federal Reserve will now allow Chinese banks to buy up American banks.

5. A $190 million bridge project up in Alaska was awarded to a Chinese firm.

6. A $400 million contract to renovate the Alexander Hamilton bridge in New York was awarded to a Chinese firm.

7. A $7.2 billion contract to construct a new bridge between San Francisco and Oakland was awarded to a Chinese firm.

8. The uniforms for the U.S. Olympic team were made in China.

9. 85 percent of all artificial Christmas trees are made in China.

10. The new World Trade Center tower is going to include glass that has been imported from China.

11. The new Martin Luther King memorial on the National Mall was made in China.

12. In 2001, American consumers spent 102 billion dollars on products made in China.  In 2011, American consumers spent 399 billion dollars on products made in China.

13. The United States spends about 4 dollars on goods and services from China for every one dollar that China spends on goods and services from the United States.

14. According to the New York Times, a Jeep Grand Cherokee that costs $27,490 in the United States costs about $85,000 in China thanks to all the tariffs.

15. The Chinese economy has grown 7 times faster than the U.S. economy has over the past decade.

16. The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.

17. The United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.

18. Overall, the United States has lost a total of more than 56,000 manufacturing facilities since 2001.

19. According to the Economic Policy Institute, America is losing half a million jobs to China every single year.

20. Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost.

21. In 2010, China produced more than twice as many automobiles as the United States did.

22. Since the auto industry bailout, approximately 70 percent of all GM vehicles have been built outside the United States.

23. After being bailed out by U.S. taxpayers, General Motors is currently involved in 11 joint ventures with companies owned by the Chinese government.  The price for entering into many of these “joint ventures” was a transfer of “state of the art technology” from General Motors to the communist Chinese.

24. Back in 1998, the United States had 25 percent of the world’s high-tech export market and China had just 10 percent. Ten years later, the United States had less than 15 percent and China’s share had soared to 20 percent.

25. The United States has lost more than a quarter of all of its high-tech manufacturing jobs over the past ten years.

26. China’s number one export to the U.S. is computer equipment.

27. The number one U.S. export to China is "scrap and trash".

28. The U.S. trade deficit with China is now more than 28 times larger than it was back in 1990.

29. Back in 1985, the U.S. trade deficit with China was just 6 million dollars for the entire year.  For the month of November 2012 alone, the U.S. trade deficit with China was 28.9 billion dollars.

30. China now consumes more energy than the United States does.

31. China is now the leading manufacturer of goods in the entire world.

32. China uses more cement than the rest of the world combined.

33. China is now the number one producer of wind and solar power on the entire globe.

34. Today, China produces nearly twice as much beer as the United States does.

35. Right now, China is producing more than three times as much coal as the United States does.

36. China now produces 11 times as much steel as the United States does.

37. China produces more than 90 percent of the global supply of rare earth elements.

38. China is now the number one supplier of components that are critical to the operation of U.S. defense systems.

39. A recent investigation by the U.S. Senate Committee on Armed Services found more than one million counterfeit Chinese parts in the Department of Defense supply chain.

40. 15 years ago, China was 14th in the world in published scientific research articles.  But now, China is expected to pass the United States and become number one very shortly.

41. China now awards more doctoral degrees in engineering each year than the United States does
42. According to one study, the Chinese economy already has roughly the same amount of purchasing power as the U.S. economy does.

43. According to the IMF, China will pass the United States and will become the largest economy in the world in 2016.
 44. Nobel economist Robert W. Fogel of the University of Chicago is projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040 if current trends continue.
Without the "globalization" of the world economy, none of this would have ever happened.  But instead of admitting our mistakes and fixing them, our politicians continue to press for even more "free trade" and even more integration with communist nations such as China.

In fact, according to Dr. Jerome Corsi, the U.S. government has already set up 257 "foreign trade zones" all over America.  These "foreign trade zones" are apparently given "special U.S. customs treatment" and are used to promote "free trade"…
Corsi noted that the U.S. government has created 257 foreign trade zones, or FTZs, throughout the United States, designed to extend special U.S. customs treatment to U.S. plants engaged in international-trade-related activities.
The FTZs tend to be located near airports, with easy access into the continental NAFTA and WTO multi-modal transportation systems being created to move free-trade goods cheaply, quickly and efficiently throughout the continent of North America.
There is nothing in the U.S. government’s description of FTZs that would prevent a foreign government, like China, from operating a shell U.S. company that is in reality owned and financed by the Chinese government and operated through a Chinese government-owned corporation, Corsi wrote.
Sadly, we are probably going to see a whole lot more of this in the years ahead.

According to Corsi, a professor of economics at Tsighua University in Beijing named Yu Qiao has suggested the following plan as a way to transform the debt that the United States owes China into something more "tangible"...
  1. China would negotiate with the U.S. government to create a “crisis relief facility,” or CRF. The CRF “would be used alongside U.S. federal efforts to stabilize the banking system and to invest in capital-intensive infrastructure projects such as high-speed railroad from Boston to Washington, D.C.
  2. China would pool a portion of its holdings of Treasury bonds under the CRF umbrella to convert sovereign debt into equity. Any CRF funds that were designated for investment in U.S. corporations would still be owned and managed by U.S. equity holders, with the Asians holding minority equity shares “that would, like preferred stock, be convertible.”
  3. The U.S. government would act as a guarantor, “providing a sovereign guarantee scheme to assure the investment principal of the CRF against possible default of targeted companies or projects”.
  4. The Federal Reserve would set up a special account to supply the liquidity the CRF would require to swap sovereign debt into industrial investment in the United States.
Apparently the Bank of China really likes this plan and would like to see something like this implemented.
 In the years ahead, perhaps many of you will end up working in a "special economic zone" for a Chinese company on a project that is being financially guaranteed by the U.S. government.

If that sounds like a form of slavery to you, the truth is that you are probably not too far off the mark.

The borrower is the servant of the lender, and we should have never allowed ourselves to get into so much debt.

Now we will pay the price.

To get an idea of how much the world has changed in recent years, just check out this incredible photo which contrasts the decline of Detroit over the years with the amazing rise of Shanghai, China.

Things did not have to turn out this way.  Unfortunately, we made decades of incredibly foolish decisions and we wrecked the greatest economic machine that the world has ever seen.

Now the future for America looks really bleak.

Or could it be that I am being too pessimistic?  Please feel free to post a comment with your thoughts below...

This article first appeared here at the Economic Collapse Blog. Michael Snyder is a writer, speaker and activist who writes and edits his own blogs The American Dream and Economic Collapse Blog. Follow him on Twitter here.